A recent report by the World Bank’s Independent Evaluation Group (IEG) finds the Bank’s water lending to overlook the most water-stressed countries.
According to the IEG, “31 per cent of all Bank projects approved since 1997 are related to water,” with a total of $54 billion of lending being directed to water between 1997 and 2007. The report finds that although the Bank’s water lending has increased by 50 per cent over the last decade, there “is no statistical relationship between the amount of Bank water lending to a country and that country’s water stress.”
Ethiopia, Haiti and Niger, for example, are all ranked at the bottom of an index measuring the availability of water in a country against demand, however all three had received only about $20 per capita in Bank funding for water projects between 1997 and 2007, compared with the largest per capita lending of almost $180 to ‘water-rich’ Belize.
The report states that the “Bank has lent heavily for irrigation and water supply, and dams and hydropower have become more important in the last few years” (see Update 69). Although the IEG notes that the Bank’s “water projects in the aggregate have good success rates when measured against objectives,” it claims “some activities which are of growing importance as water stress increases have become less prominent in the Bank’s portfolio.” These include “climate change, migration to coastal zones, and the declining quality of the water resources available to most major cities and industry in the coming decades.”
Tariffs and user fees
The IEG also calls for more clarity from the Bank on “how to cover the cost of water service delivery in the absence of full cost recovery.” The report claims that the Bank’s poor rate of cost recovery, at only 15 per cent of what was expected, “has raised concerns about sustainability” and the “question of who will pay for uncovered costs remains to be resolved.”
The Bank management response said “low tariffs (that is, below full cost-recovery levels) ensure that water services are affordable to the population. While raising tariffs to recover a greater share of costs … may be economically sound, political constituencies have often prevented tariffs from being increased.”
However, the IEG also worries about equity in the application of user fees. In Tanzania, the report notes that “the poor seemed to be subject to a plethora of water-related fees,” which “came on top of fees for education and health services.”
According to Richard Mahapatra from the NGO WaterAid in India, “the principle of cost recovery will never allow the World Bank to spend on basic water provisioning, because the poorest in the South are also usually the people who don’t have access to water.” He adds, “the Bank treats water as an economic good on a par with any other service even though it is a non-negotiable condition for survival. Many people pay for water because they need water, even though they can’t afford to pay. This has led to further exclusion from basic amenities, a violation of their fundamental right to access water and increasing debt levels for the poor.”
The report makes recommendations on achieving more effective demand management and strengthening the supply and use of data on water. It also finds that “the Bank has increasingly focused on water services delivery, but there has been a declining emphasis on monitoring economic returns, water quality, and health outcomes.” On private sector involvement the IEG generally approves of the outcome in urban areas, but suggests that Bank-financed projects in rural areas need more effective regulatory mechanisms.